Sectoral performance: Rocky road of the infrastructure sector
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Kinerja sectoral: Jejak terjal sektor infrastruktur
30 June 2023
By: M. Taufikul Basari
Jakarta - Even though the index of several other sectors is worse, share performance in the infrastructure sector throughout the first half of this year was discouraging. Two construction state-owned enterprises (SOEs), namely WSKT and WIKA, were bringing the performance down.
Meanwhile, state-owned toll road issuer PT Jasa Marga Persero Tbk (JSMR) sustained the index of IDXINFRA. JSMR is still being recommended by analysts.
The shares of three SOEs, namely PT Dayamitra Telekomunikasi (MTEL), PT Waskita Karya Persero Tbk (WSKT), and PT Wijaya Karya Persero Tbk (WIKA), put pressure on the index that consists of 62 constituents.
Based on Bloomberg’s data, MTEL’s shares supressed the infrastructure sector by 63.41%. Throughout the first six months of 2023, MTEL’s shares decreased by 14.22% to Rp665.
Meanwhile, WSKT’s shares that supressed the infrastructure sector by 62.45% decreased by 43.89% year-to-date (YtD) to Rp202 at the end of the first half of 2023. WSKT’s shares were also suspended two times during the period.
Behind WSKT, there are shares of another construction SOE, which is WIKA that supressed the infrastructure sector by 52.60%. WIKA’s shares decreased by 36.88% to Rp505.
On the other hand, PT Indosat Tbk (ISAT) has shares that boosted the infrastructure sector the most by 167.10%. ISAT’s shares yielded 44.33% gain in 6 months.
Behind ISAT, there are two SOEs, JSMR and PT Telkom Indonesia Persero Tbk (TLKM), with shares that have increased by 30% and 11% respectively throughout 2023.
JSMR’s shares are still the favourite of analysts. Based on Bloomberg’s consensus, 21 analysts who analysed the shares recommend buying at an average annual target price of Rp4,726. It means that there is a potential return of 24.4% from the current price.
JSMR’s excellent performance is sustained by the speedy recovery of the company’s toll road revenue after it was hit by the pandemic in 2020.
PT Ciptadana Sekuritas Analyst Muhammad Gibran mentioned that the surge in toll road traffic volume increased JSMR’s revenue this year to Rp15.3 trillion or by 10% year-on-year (YoY). For 2024 and 2025, the growth prospect is around 8% to 13%.
“JSMR’s traffic volume recovery to 1,229.9 million vehicles is on par with the pre-pandemic level that reached 1,229.7 million vehicles thanks to the relaxation of the public activity restriction,” he said in a research published on Bloomberg Terminal.
Besides the recovering traffic volume, he continued that tariffs were adjusted every six months to grow other revenues.
The growth of toll roads managed by JSMR is also impressive with a CAGR of toll roads that reaches 11.4%. Gibran mentioned that, with the target to extend 35 km this year, JSMR would own a total of 1,295 km of toll roads in 2023, including Jakarta-Cikampek II (31.25 km) and Cinere-Serpong II Segment of JORR 2 (3.64 km).
“We believe that JSMR will benefit from extending their toll roads and reducing their capital expenditure,” Gibran said while setting the target price at Rp4,450.
Tower issuer
On the other hand, even though reductions are looming, the consensus of 18 Bloomberg analysts recommends buying the shares of the telecommunications infrastructure issuer, MTEL. The average annual target price is also quite optimistic at around Rp937, so the shares have the potential to yield 41% gain from the closing price on Wednesday (28/6).
For example, an analyst from J.P Morgan has set an overweight rating for MTEL after seeing the tower issuer’s performance in the first quarter of 2023 that was unsatisfactory.
“MTEL has the potential to grow better. Meanwhile, the growth prospect of TBIG and TOWR is moderate,” he wrote in last month’s research.
According to him, MTEL benefits from a combination of healthy organic growth and acquisitions. MTEL has received healthy investments from TLKM, EXCL, and ISAT. However, they lowered the target price of MTEL to Rp900. Meanwhile, the target price of TOWR and TBIG is at Rp950 and Rp1,900 respectively.
Meanwhile, for WSKT, out of 9 analysts, five recommend holding and the other three recommend buying. WSKT’s shares are still suspended due to the delay in the settlement of the 11th interest payment for Continuous Bond IV Waskita Karya Phase I Year 2020 that was due on 6 May 2023.
In their research on 20 June, an analyst from J.P Morgan mentioned that WSKT and WIKA were impacted by the abundant investments during the infrastructure booming period from 2015 to 2019.
According to J.P Morgan, investments in the high-speed train for WIKA and toll roads for WSKT will burden their balance sheet and slow down their profit and cash flow recovery.
“In the infrastructure sector, we favour JSMR as a toll road operator that benefits from the relaxed capital spending structure. Hence, we hope their profit will recover,” J.P Morgan’s analyst wrote.
